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Falling Oil Prices Prompt Surge of Job Cuts

Planned job cuts for January 2015 reached a two-year high, with 40 percent of those attributable to cost-cutting in the energy sector, according to global outplacement consultancy Challenger, Gray & Christmas Inc.

U.S.-based employers announced plans to shed 53,041 jobs from their payrolls to start the year, up 63 percent from the 32,640 planned layoffs announced in December 2014.

The January 2015 figure was the highest monthly job-cut tally since February 2013 (55,356) and the highest January total since 2012, when employers announced 53,486 job cuts.

Of the cuts announced last month, 21,322 were directly attributed to the recent and sharp decline in oil prices, according to Challenger. The largest number of these cuts (20,193) occurred in the energy industry. Falling oil prices also contributed to job cuts in the industrial goods manufacturing sector, where companies supplying products and materials to oil drillers were forced to close. These firms announced 4,859 job cuts in January.

“We may see oil-related job cuts extend well beyond those industries directly involved with exploration and extraction,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas, in a news release. “The economies throughout the northern United States that have been thriving as a result of the oil boom could experience a steep decline in employment across all sectors, including retail, construction, food service and entertainment,” he said.

Conversely, a number of industries nationwide will benefit from falling energy prices. Airlines, trucking companies, plastics manufacturers and paint makers are all seeing bottom lines improve, said Challenger. “Despite the recent surge in job cuts, the net result of falling oil prices could ultimately prove to be positive for the economy, as a whole.”

The retail sector posted the second largest job-cut total in January, behind energy. Retailers announced 6,699 cuts, primarily from J.C. Penney and teen-fashion retailer Wet Seal. Despite large layoff announcements from the two companies, retail job cuts were still lower than the same month a year ago, when stores announced 11,394 cuts coming out of the holiday season.

The financial, industrial goods and computer industries rounded out the top five areas with the most layoffs planned for January.

Texas saw the most job cuts in January (19,833), followed by California (7,268), New York (5,140), Oklahoma (2,000) and Florida (1,911).